A Simple Example to Introduce the Basic Financial Arrangements 87
Table 4-1. Risk Assessment Matrix
Relative Risk Level
Associated with Financing Options
———————————————————
Risk
Option
Major
Mitigating
Factors
#1 #2 #3 #4 #5 #6
Variables
Strategies
——————————————————————————————————————————————————Equipment
3
3
3
3
3
1
Quality of specs
In-house/consultants’ expertise
performance
Selection process
Legal ability available
warranty
Contract conditions
——————————————————————————————————————————————————Technical
4
4
4
3
2
1
Consultant qualifications
Selection process
expertise
Negotiation
——————————————————————————————————————————————————Audit
3
3
3
3
3
2
Auditor ability
Selection process
quality;
Review capability
Review a sample audit
accuracy
Vender bias
3rd party validation
Establish procedural criteria
& scope of audit
——————————————————————————————————————————————————Project 3
3
3
3
3
2
Ability of PM or CM provided Careful planning with DPW and
management
in-house and through
clear definition of roles
inadequate
project delivery option
Service provider selection process
——————————————————————————————————————————————————Construction/
5
4
3
2
2
1
Vendor/subcontractor
Selection process
installation
qualifications
Performance/payment bonds
Contract provisions
Legal ability
——————————————————————————————————————————————————Maintenance
5
5
5
5
3
1
Manpower
Outsourcing
& operations
In-house staff qualifications
Training/experience
Training quality
Selection process
——————————————————————————————————————————————————Savings
5
4
4
4
3
1
Varies by measure
Contractual obligations
persistence
Administrative commitment
Vendor selection
O&M attitudes,
ESCO selection
Training/experience
Guarantees offered
——————————————————————————————————————————————————Legend: N/A not applicable; 1 low risk; 2 low-medium risk; 3 medium risk; 4 medium-high risk; 5 high risk